The scope for judicial interference with arbitral awards is minimal, and intervention is limited to instances of patent illegality or perverse findings according to Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

JUDGMENT

Sanjeev Sachdeva, J. (Oral)

CM No.31027/2022 (Exemption)

Allowed subject to all just exceptions.

FAO (OS) (COMM) 176/2022 and CM APPL. 31028/2022 (stay)

1. Appellant impugns judgment dated 24.02.2022 whereby the petition filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act') impugning the award dated 13.05.2015 has been dismissed.

2. At the outset, learned counsel for the appellant commenced his submissions by candidly referring to the judgment of the Supreme Court in Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Limited, (2022)1 SCC 131 wherein the Supreme Court has clarified the scope of examination under Sections 34 and 37 of the Act in the following terms:

"28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.

29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression "patent illegality"."

3. In the present case, the predecessor of the appellant and predecessor of the Responde